The apartment sales market experienced a remarkable resurgence in the second quarter of 2024, marking a significant turnaround after seven consecutive quarters of steep declines. According to a report from MSCI Real Assets, sales jumped 20% year-over-year, reaching $38.8 billion. This notable uptick was largely driven by a major transaction involving Blackstone Real Estate Partners X, which completed a $10 billion purchase of Apartment Income REIT Corp, a Denver-based entity. Without this deal, the market would have seen an 11% decline, which still would have been a significant improvement over the 68% drop recorded in Q2 2023.
Despite the overall market improvement, the Real Capital Analytics Commercial Property Price Indices reflected a 7.5% year-over-year decline in the second quarter. However, this figure represents an improvement from the low point of the cycle, which saw a 13.3% year-over-year decline in Q3 2023.
Mid- and High-Rise Transactions Lead the Way
A deeper dive into the data reveals that mid- and high-rise apartment transactions were the standout performers, jumping 45% to $19.6 billion in Q2. Sales of garden properties, while more modest, still saw a 3% increase to $19.2 billion. Portfolio sales also surged, powered by the Blackstone-AIR deal, with a 92% increase to $15.6 billion. Individual asset sales, often considered the backbone of multifamily transactions, experienced a minor 4% year-over-year decline to $23.2 billion. This was a notable improvement from the 66% drop seen in Q2 2023.
While the current figures remain below the pre-pandemic norm of $29 billion for each Q2, the decline is now only 8% compared to the worst year in the five-year period before the pandemic. The MSCI report suggests that the market may see sustained growth in the coming quarters.
West Coast Markets Show Promise
Mike Green, CEO of Virtú Investments, sees a promising future for the multifamily market, particularly in the West Coast regions targeted by his Larkspur, California-based company. “We have $500 million under contract now,” Green shared with Multifamily Dive. “So, we’re going to be closing that pipeline through the end of September, and we’re seeing more people at those auctions.”
Green noted a significant shift in market dynamics, with institutions beginning to sell assets, potentially increasing market volume. Virtú recently acquired properties from global investment giants JP Morgan in Portland and UBS in San Diego. With institutions largely stepping back from acquisitions, high-net-worth individuals and family offices are stepping in, providing opportunities for firms like Virtú to make strategic buys.
“The institutional sellers, who are selling to meet redemptions in their open-ended funds, aren’t finding any buyers other than the high-net-worth, family offices,” Green explained. “These buyers are more patient and are willing to make longer-term plays.”
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